Thursday, March 19, 2015
Friday, February 6, 2015
Perry Cooper, of the BNA Class Action Litigation Report, published a special report yesterday titled "Issue Classes Swell in Consumer Suits: Are Potential Rewards Worth the Risk?" A subscription is required to read the full article, but it does a nice job of portraying different points of view on the topic - John Beisner and Jessica Miller (Sadden Arps) for the defense, Gary Mason (Whitfield Bryson & Mason) for the plaintiffs, and some of my own views as an academic.
Issue classes have been on my mind for awhile now as well as the minds of many others--the Rule 23 Subcommittee has indicated that the topic tops their list for potential rule changes. As such, I've been working on an article titled "Constructing Issue Classes." I'm still tweaking it, so it's not available for public consumption yet, but for those interested in the topic, here's the gist of it:
Issue classes under Rule 23(c)(4) have the potential to adjudicate collectively what actually unites plaintiffs: defendant's uniform conduct. One can separate the elements of any cause of action into "conduct elements" that relate to the defendant's conduct--what the defendant knew, when the defendant knew it, etc.--or "eligibility elements" that relate to the plaintiff's eligibility for relief--specific causation, damages, etc. When defendant's conduct toward the plaintiffs is uniform, as it was for example in the smelly washing machine cases, then adjudicating elements relating to that conduct collectively can even out resource imbalances between plaintiffs' attorneys and defendants and reduce the possibility of inconsistent verdicts.
As you may imagine, a lot rides on that one trial. Issue classes work by generating two-way preclusion in follow-on cases. In the Ohio "smelly washer" trial against Whirlpool, the defense verdict meant that defendants could preclude class members from relitigating those same issues in subsequent cases. (Granted, the class was limited to Ohio purchasers, but did include some 100,000 consumers.) The high stakes suggest that anytime courts certify an issue for class treatment they should be prepared to allow an interlocutory appeal on the merits (not just the certification question as Rule 23(f) permits). It also means that courts shouldn't certify trivial issues for class treatment. As the ALI in its Principles of the Law of Aggregate Litigation suggest, the issue class should "materially advance the resolution of the claims," which would be the case with regard to most conduct-related questions.
Monday, February 2, 2015
Sunday, December 14, 2014
My colleague Professor Debra Lyn Bassett (Southwestern) has posted to SSRN her article, Class Action Silence, 94 Boston U. L. Rev. 1781 (forthcoming 2014). Here is the abstract:
A number of law review articles have noted the issues inherent in treating class members' failure to opt out as consent to the court's personal jurisdiction or as agreement to a proposed class settlement. Missing from the existing analyses, however, is the "big picture" -- the reality that class action silence is layered, resulting in silence that is repeatedly and inappropriately compounded. At each and every step in class action litigation, absent class members are not just expected, but effectively encouraged, to remain silent. Moreover, at every step, courts interpret class members' silence as consent. The ultimate result is a "piling on" of consents: the expected and encouraged silence is deemed to constitute consent to the filing of the class suit and consent to personal jurisdiction and consent to be bound to any resulting class judgment and consent to the proposed class settlement and approval of the proposed settlement's terms and conditions. Yet this compounded effect occurs under highly ambiguous circumstances, where arguably the most sensible interpretation of class members' silence is not consent, but confusion. The multiple and contradictory meanings of silence render it unreasonable to equate the failure to opt out with consent. The fallacy of repeatedly ascribing consent to highly ambiguous silence should be recognized as a due process danger that potentially can deprive class members of property rights and their day in court.
Wednesday, December 10, 2014
Friday, October 31, 2014
The Ohio jury's verdict yesterday was in favor of the defendant, Whirlpool, in the moldy washing machine issue class action. BNA has the report.
In re Whirlpool Corp. Front-Loading Washer Prods. Liab. Litig. (Glazer v. Whirlpool Corp.), N.D. Ohio, No. 08-65001, verdict10/30/14
Saturday, October 4, 2014
I've been a bit slow in posting this, but Louisiana Law Review hosted an excellent symposium last spring titled The Rest of the Story: Resolving the Cases Remanded by the MDL. As part of that symposium, I wrote a piece titled Remanding Multidistrict Litigation. Remands are something that have received scant attention in the scholarly literature, but are a constant hope for many plaintiffs' lawyers involved in multidistrict litigation (well, at least those who aren't on the steering committees).
I just got around to posting the piece on SSRN today. Here's the abstract:
Multidistrict litigation has frequently been described as a “black hole” because transfer is typically a one-way ticket. The numbers lend truth to this proposition. As of 2010, the Judicial Panel on Multidistrict Litigation remanded only 3.425% of cases to their original districts. That number dwindled to 3.1% in 2012, and to a scant 2.9% in 2013. Retaining cases in hopes of forcing a global settlement can cause a constellation of complications. These concerns range from procedural justice issues over selecting a forum and correcting error, to substantive concerns about fidelity to state laws, to undermining democratic participation ideals fulfilled through jury trials in affected communities. Yet, if transferee judges remanded cases after overseeing discovery into common issues, they could alleviate those concerns while avoiding inconsistent rulings on common questions and streamlining discovery.
Despite the potential upside, remand rarely occurs because it disfavors those with litigation control—transferee judges, lead plaintiffs’ attorneys, and defendants. Transferee judges deem settlement a hallmark of their success. Lead plaintiffs’ lawyers try to increase their fees by inserting fee provisions into settlements. Likewise, plaintiffs’ attorneys can bypass doctrinal uncertainties over weak claims by packaging plaintiffs together in a global settlement. And aggregate settlements allow defendants to resolve as many claims as possible in one stroke, take their hit, and return to business, which their shareholders view as a net positive. The remand process itself defers to these vested interests. Although the Panel could remand cases at a party’s request, in practice it appears never to have done so. Rather, it waits for the transferee judge to admit defeat and suggest remand—thereby conceding failure.
For transferee judges to begin remanding cases, the “pro-settlement” norm and “remand-as-a-failure” stigma must change. Accordingly, transferee judges should routinely entertain a suggestion for remand by a party or initiate them sua sponte as soon as discovery on common issues concludes and only case-specific issues remain. Likewise, the Panel should seriously consider parties’ remand requests even when the transferee judge does not support them. This reopens a direct line for parties to request remand when common discovery ends, but the transferee judge prefers to hold cases hostage in hopes of coercing settlement.
Sunday, September 21, 2014
Professors Adam Zimmerman (Loyola Los Angeles) and Dana Remus (North Carolina) have posted to SSRN their article, Aggregate Litigation Goes Private, 63 Emory L.J. 1317 (2014). Here is the abstract:
In Disaggregative Mechanisms, Professor Jaime Dodge documents how corporate defendants increasingly design their own mass resolution systems to avoid collective litigation — what she calls “disaggregative” dispute resolution. According to Dodge, such schemes promise benefits not only to putative defendants, but also to plaintiffs — resolving disputes quickly, handling large volumes of claims predictably, and sometimes, offering more compensation than would be available through aggregate litigation. She observes, however, that these systems also risk underdeterrence. Dodge concludes by endorsing disaggregative mechanisms while suggesting a need for more public oversight.
In the following response, we argue that, left unregulated, such highvolume claim systems threaten transparency, deterrence, and even the rule of law. We therefore agree with Dodge’s call for public oversight. But we observe that a number of policing and oversight mechanisms already exist. Today, lawmakers and regulators police collective arbitration and private settlement funds, in a wide variety of areas — from financial and environmental regulations to employment and consumer protection laws. After reviewing the ways that policymakers currently regulate corporate dispute resolution, we examine their effectiveness by exploring two regulated private settlement systems in more detail: (1) regulations developed by the Obama Administration that require airlines to offer “liquidated damages” using a preapproved settlement grid when they overbook customers on a flight and (2) regulations imposed by the Office of the Comptroller of the Currency following accusations that many of the nation’s largest banks executed “robo-signed” mortgages that required banks to perform a detailed “independent foreclosure review” of past loans with borrowers. These case studies demonstrate both the challenges to, and opportunities for, government bodies that attempt to encourage sound regulation of mass private settlement systems without compromising their potential contributions to increased access, equality, and efficiency.
Wednesday, September 10, 2014
Professor Neal Katyal (Georgetown) and Theodore Olson (Gibson Dunn) take part in a Federalist Society panel on class action reform and the BP Deepwater Horizon case; the panel is moderated by Stuart Taylor (Brookings Institution).
Friday, August 22, 2014
In a recent decision authored by Judge Easterbrook, the 7th Circuit suggested that plaintiffs looking to prove that their case falls under the "home state exception" to CAFA can use sampling and extrapolation to prove their allegations. The case is Myrick v. WellPoint, Inc., 2014 BL 229924, 7th Cir., No. 12-3882 , 8/19/14 (citation is to Bloomberg, the Westlaw cite is 2014 WL 4073065). The case concerns allegations about a health insurance policy sold in Illinois.
Judge Easterbrook, explaining that the burden of proving the home state exception is on the party assserting it in the 7th Circuit, explained a potential procedure as follows:
Counsel for the proposed class assumed that there were only two options: determine the citizenship of every policyholder (expensive) or rely on assumptions (cheap). But there's at least one more option: take a random sample of policyholders (100, say), ascertain the citizenship of each of these on the date the case was removed, and extrapolate to the class as a whole. If the sample yields a lopsided result (say, 90% Illinois citizens or only 50% Illinois citizens) then the outcome is clear without the need for more evidence. (The more lopsided the result, the smaller the sample needed to achieve statistical significance.) If the result is close to the statutory two-thirds line, then do more sampling and hire a statistician to ensure that the larger sample produces a reliable result.
Monday, July 14, 2014
Professor Linda Mullenix (U. Texas) has posted to SSRN her article, Ending Class Actions as We Know Them: Rethinking the American Class Action, Emory. L.J. (forthcoming 2014). Here is the abstract:
Class actions have been a feature of the American litigation landscape for over 75 years. For most of this period, American-style class litigation was either unknown or resisted around the world. Notwithstanding this chilly reception abroad, American class litigation has always been a central feature of American procedural exceptionalism, nurtured on an idealized historical narrative of the class action device. Although this romantic narrative endures, the experience of the past twenty-five years illuminates a very different chronicle about class litigation. Thus, in the twenty-first century American class action litigation has evolved in ways that are significantly removed from its golden age. The transformation of class action litigation raises legitimate questions concerning the fairness and utility of this procedural mechanism, and whether class litigation actually accomplishes its stated goals and rationales. With the embrace of aggregative non-class settlements as a primary – if not preferred – modality for large scale dispute resolution, the time has come to question whether the American class action in its twenty-first century incarnation has become a disutilitarian artifact of an earlier time. This article explores the evolving dysfunction of the American class action and proposes a return to a more limited, cabined role for class litigation. In so doing, the article eschews alternative non-class aggregate settlement mechanisms that have come to dominate the litigation landscape. The article ultimately asks readers to envision a world without the twenty-first century American damage class action, limiting class procedure to injunctive remedies. In lieu of the damage class action, the article encourages more robust public regulatory enforcement for alleged violation of the laws.
Sunday, July 13, 2014
Representatives of the U.S. Chamber of Commerce Institute for Legal Reform, American Insurance Association, American Tort Reform Association, Lawyers for Civil Justice, and National Association of Manufacturers have submitted a letter to Administrative Office of the U.S. Courts, requesting the that Rule 26 of the Federal Rules of Civil Procedure be amended to require disclosure of third-party litigation financing. The Institute for Legal Reform also has provided a summary of their request.
Thursday, May 29, 2014
Plaintiffs' attorneys huddled in Chicago on Wednesday to strategize about where to ask the MDL Panel to send the GM ignition switch cases. As usual, there are several things that will influence plaintffs' attorneys' pick.
According to this morning's article in the WSJ, Elizabeth Cabraser called the litigation "a perfect storm for a class action." Maybe. But that will largely depend on which circuit and which judge hears the case, how GM's bankruptcy affects the pending claims, and whether attorneys forgo personal injury claims (they will likely be excluded in the class definition) to pursue product liability and economic injuries.
Choice of procedural law, like how to apply Rule 23, can vary. Under Chan v. Korean Airlines, Ltd. (D.C. Cir. 1989), the Van Dusen doctrine, which holds that transferee courts must apply the choice of law interpretation of the transferor circuit, may not apply to 1407 transfers. Rather, when it comes to procedural and other federal law matters, Korean Airlines suggests that transferee courts are obligated to follow their own interpretation of the relevant law. Several circuits follow this rationale including the Second, Eighth, Ninth, and Eleventh. Other circuits, including most notably, the Seventh, have held that a transferee court should use transferor court's interpretation of federal law.
According to Bloomberg, several plaintiffs' attorneys are pushing for a California venue before Judge James Selna, who is currently handling the Toyota acceleration MDL. This strategy makes sense on several fronts. The Ninth Circuit, which originally upheld (in part) the certification in Dukes v. Wal-Mart Stores, Inc., has shown a willingness to resolve aggregate cases through class actions. And given that courts in the Ninth Circuit apply their own procedural law where circuit splits are concerned, this could further help plaintiffs. Finally, Judge Selna, who certified an economic loss settlement class action in the Toyota litigation, is a logical choice.
But other plaintiffs' attorneys (and of couse GM) have other ideas about where the MDL should land. Bloomberg reports:
Other plaintiffs want the cases to be heard in Chicago, Miami or Corpus Christi,Texas, where they have sued. GM wants the cases consolidated in the federal court in Manhattan, about a mile from where a prior incarnation of the company filed for bankruptcy in 2009. Company lawyers say proximity to the bankruptcy court trumps Selna’s experience.
While the Panel considers the forum requests by the parties, it is in no way limited to those venues. There are several factors that it typically cites in favor of forum selection such as the location of discovery materials, convenience of the witnesses, location of grand jury proceedings, possibility of coordination with related state-court proceedings, where the majority of cases are located, knowledge of the transferee judge, and the willingness and motivation of a particular judge to handle an MDL docket. Of these factors, the transferee judge is by far the most important. The Panel tends to look for judges who have handled MDLs successfully in the past. And, for better or worse, "successful" means quick settlement (see here, p. 11-12 for more).
The Judicial Panel on Multidistrict Litigaiton is comprised of seven judges from around the country. Judge David Proctor is the Panel's newest edition and was added just this year to replace Judge Paul Barbadoro.
For more on the process that will--and should--unfold once a transferee judge is appointed and how those judges should go about appointing lead lawyers, see here.
Wednesday, May 28, 2014
As I've slowly emerged from my grading slump, I've caught up on a number of interesting articles dealing with class actions, two of which are authored by Professor Jay Tidmarsh at Notre Dame. In case you missed them, too, I thought I'd mention them here.
The first is a new take on auctions. Auctions have been proposed and used to pick class counsel, but Tidmarsh proposes using them to increase settlement prices. Once the parties reach a settlement, the court puts the class's claims up for auction. If an entity--presumably a corporation, though perhaps a third-party financier?--outbids the settlement price, that entity purchases the class's rights to sue and can continue to litigate against the defendant. Here's the idea in Tidmarsh's own words in his SSRN abstract:
Although they promise better deterrence at a lower cost, class actions are infected with problems that can keep them from delivering on this promise. One of these problems occurs when the agents for the class (the class representative and class counsel) advance their own interests at the expense of the class. Controlling agency cost, which often manifests itself at the time of settlement, has been the impetus behind a number of class-action reform proposals.
This Article develops a proposal that, in conjunction with reforms in fee structure and opt-out rights, controls agency costs at the time of settlement. The idea is to allow the court, once a settlement has been achieved, to put the class’s claims up for auction, with the settlement acting as reserve price. An entity that outbids the settlement becomes owner of the class’s claims, and may continue to pursue the case against the defendant. A successful auction results in more compensation for the class. On the other hand, if no bids are received, the court has evidence that the settlement was fair. The prospect of a settlement auction also deters class counsel and the defendant from negotiating a sweetheart deal that sells out the class.
The Article works through a series of theoretical and practical issues of settlement auction, including the standards that a court should use to evaluate bids, the limitations on who may bid, and the ways to encourage the emergence of an auction market.
Tidmarsh's second article returns to a long-espoused notion: trial by statistics (or, as Justice Scalia used in the pejorative sense in Wal-Mart Stores, Inc. v. Dukes, "Trial by Statistics."). Here's the abstract, which explains the idea concisely:
“Trial by statistics” was a means by which a court could resolve a large number of aggregated claims: a court could try a random sample of claim, and extrapolate the average result to the remainder. In Wal-Mart, Inc. v. Dukes, the Supreme Court seemingly ended the practice at the federal level, thus removing from judges a tool that made mass aggregation more feasible.
After examining the benefits and drawbacks of trial by statistics, this Article suggests an alternative that harnesses many of the positive features of the technique while avoiding its major difficulties. The technique is the “presumptive judgment”: a court conducts trials in a random sample of cases and averages the results, as in trial by statistics. It then presumptively applies the average award to all other cases, but, unlike trial by statistics, any party can reject the presumptive award in favor of individual trial. The Article describes the circumstances in which parties have an incentive to contest the presumption, and explores a series of real-world issues raised by this approach, including problems of outlier verdicts, strategic behavior by parties, and the parties’ risk preferences. It proposes ways to minimize these issues, including a requirement that the party who reject a presumptive judgment must pay both sides’ costs and attorneys’ fees at trial.
The Article concludes by showing that this approach is consonant with important procedural values such as efficiency, the accurate enforcement of individual rights, dignity, and autonomy.
Friday, May 16, 2014
I posted a new article to SSRN this morning that's been a labor of love for well over a year now. I'm excited about this new piece for a few reasons.
First, it debuts an original data set of all lead lawyers appointed in 72 product liability and sales practices MDLs that were pending as of May 14, 2013. As such, it's the only paper (that I know of) that includes empirical evidence on plaintiffs-side repeat players appointed to leadership positions. (Yes, it includes a list of some of the most entrenched repeat lawyers and law firms as an appendix.) (If this is of interest, have a look at Margaret Williams, Emery Lee, and Catherine Borden's recently published paper in the Journal of Tort Law titled Repeat Players in Federal Multidistrict Litigation, which looks at all plaintiffs' attorneys in MDLs using social network analysis.)
I also explain why appointing a leadership group comprised of predominately repeat players can cause inadequate representation problems. For example, repeat players playing the long game have rational, economic incentives to curry favor with one another, protect their reputations, and develop reciprocal relationships to form funding coalitions and receive client referrals. As such, extra-legal, interpersonal, and business concerns may govern their interactions and trump their agency obligations to uniquely situated clients who could threaten to bust a multi-million dollar deal. Non-conforming lawyers may be ostracized and informally sanctioned, which promotes cooperation, but deters dissent and vigorous representation. Over time, expressing contrary opinions could brand the dissenting lawyer a defector, which could decrease lucrative leadership opportunities. (Other reasons abound, which I explain on pages 25-27 of the paper.)
Second, it provides some much needed guidance for transferee judges. Although the Manual for Complex Litigation remains the go-to guide for transferee judges, it hasn't been updated in 10 years. So much has changed since the fourth edition was published in 2004. Accordingly, in "Judging Multidistrict Litigation," I suggest best practices for appointing and compensating lead lawyers. Judges can compensate lead lawyers on a coherent and more predictable basis by distilling current theories down to their common denominator: quantum meruit. Quantum-meruit awards would align fees with other attorney-fee decisions and compensate leaders based on the value they actually add.
Third, as anyone familiar with the area knows, settlement review in nonclass litigation is controversial at best. After judges expressly deny class certification they then harken back to Rule 23 and their "inherent equitable authority" to comment on settlements. So, employing a quantum-meruit theory for awarding lead lawyers' attorneys' fees would give judges a legitimate private-law basis for scrutinizing settlements. Because courts must evaluate the case's success to determine how much compensation is merited, it could likewise help stymie a trend toward self-dealing where repeat players insert fee provisions into master settlements and require plaintiffs and their attorneys to "consent" to fee increases to obtain settlement awards.
The article is forthcoming in N.Y.U. Law Review in April of 2015, so I still have a bit of time to tinker with it and welcome comments in the interim (eburch at uga.edu). In the meantime, here's the formal SSRN abstract.
High-stakes multidistrict litigations saddle the transferee judges who manage them with an odd juxtaposition of power and impotence. On one hand, judges appoint and compensate lead lawyers (who effectively replace parties’ chosen counsel) and promote settlement with scant appellate scrutiny or legislative oversight. But on the other, without the arsenal class certification once afforded, judges are relatively powerless to police the private settlements they encourage. Of course, this power shortage is of little concern since parties consent to settle.
Or do they? Contrary to conventional wisdom, this Article introduces new empirical data revealing that judges appoint an overwhelming number of repeat players to leadership positions, which may complicate genuine consent through inadequate representation. Repeat players’ financial, reputational, and reciprocity concerns can govern their interactions with one another and opposing counsel, often trumping fidelity to their clients. Systemic pathologies can result: dictatorial attorney hierarchies that fail to adequately represent the spectrum of claimants’ diverse interests, repeat players trading in influence to increase their fees, collusive private deals that lack a viable monitor, and malleable procedural norms that undermine predictability.
Current judicial practices feed these pathologies. First, when judges appoint lead lawyers early in the litigation based on cooperative tendencies, experience, and financial resources, they often select repeat players. But most conflicts do not arise until discovery and repeat players have few self-interested reasons to dissent or derail the lucrative settlements they negotiate. Second, because steering committees are a relatively new phenomenon and transferee judges have no formal powers beyond those in the Federal Rules, judges have pieced together various doctrines to justify compensating lead lawyers. The erratic fee awards that result lack coherent limits. So, judges then permit lead lawyers to circumvent their rulings and the doctrinal inconsistencies by contracting with the defendant to embed fee provisions in global settlements—a well recognized form of self-dealing. Yet, when those settlements ignite concern, judges lack the formal tools to review them.
These pathologies need not persist. Appointing cognitively diverse attorneys who represent heterogeneous clients, permitting third-party financing, encouraging objections and dissent from non-lead counsel, and selecting permanent leadership after conflicts develop can expand the pool of qualified applicants and promote adequate representation. Compensating these lead lawyers on a quantum-meruit basis could then smooth doctrinal inconsistencies, align these fee awards with other attorneys’ fees, and impose dependable outer limits. Finally, because quantum meruit demands that judges assess the benefit lead lawyers’ conferred on the plaintiffs and the results they achieved, it equips judges with a private-law basis for assessing nonclass settlements and harnesses their review to a very powerful carrot: attorneys’ fees.
May 16, 2014 in Aggregate Litigation Procedures, Class Actions, Ethics, Informal Aggregation, Lawyers, Mass Tort Scholarship, Procedure, Products Liability, Settlement, Vioxx, Zyprexa | Permalink | Comments (0) | TrackBack (0)
Thursday, April 17, 2014
The Stanford Journal of Complex Litigation is hosting a symposium, "A Complicated Cleanup: The BP Oil Spill Litigation," on Thursday, May 8, 2014 and Friday, May 9, 2014, at Stanford Law School. The keynote address speaker is Kenneth Feinberg, the Gulf Coast Claims Administrator. Other symposium speakers will include Elizabeth Cabraser of Lieff Cabraser, Professor Francis McGovern (Duke), Professor Linda Mullenix (Texas), Professor Maya Stenitz (Iowa), and myself. Panel moderators will include Stanford Law Professors Nora Engstrom, Deborah Hensler, and Janet Alexander.
Sunday, March 23, 2014
I'm serving as Co-Director of Southwestern Law School's 2014 Vancouver Summer Law Program, which is offered in collaboration with the University of British Columbia Faculty of Law and the International Centre for Criminal Law Reform and Criminal Justice Policy. All classes will take place at the University of British Columbia's new Allard Hall, which was completed in 2011 at a cost of $56 million. On-campus housing at St. Andrew's Hall next to the law school may also be arranged through the summer law program. The program will run from May 25 to June 25, 2014. Here is the brochure.
One of the courses offered will be a course on Global Tort Litigation, which I'll be co-teaching with Professor Jasminka Kalajdzic of the University of Windsor. Other courses include comparative criminal procedure, international environmental law, and comparative sexual orientation law; students may elect to take two courses for four units, or three courses for six units.
We welcome applications from students in good standing at an ABA-approved or state-accredited American law school or accredited Canadian law school. Special reduced tuition rates are available for Canadian law students. Come join us in beautiful Vancouver, Canada!
Friday, March 14, 2014
In a decision issued on March 3, the Fifth Circuit held that BP must stick to the settlement it signed on to, even if it doesn't like any longer the broad approach to compensation it once agreed to. As Professor and former Soliciter General Charles Fried said, in sum and substance, a contract is a promise. Here is an excerpt from the Fifth Circuit opinion:
There is nothing fundamentally unreasonable about what BP accepted but now wishes it had not. One event during negotiations in the fall of 2012 suggests reasons for just requiring a certification [instead of proof of causation]. The claims administrator, in working through how the proposed claims processing would apply in specific situations, submitted a hypothetical to BP and others. It posited three accountants being partners in a small firm located in a relevant geographic region. One of the three partners takes medical leave in the period immediately following the disaster, thus reducing profits in that period because that partner is not performing services for the firm. At least some of the firm's loss, then, would have resulted from the absence of the partner during his medical leave. BP responded that such a claim should be paid.
We raise this not for the purpose of analyzing an issue we conclude is not relevant to our decision, namely, whether BP is estopped from its current arguments. Instead, we mention it in order to identify the practical problem mass processing of claims such as these presents, a problem that supports the logic of the terms of the Settlement Agreement. These are business loss claims. Why businesses fail or, why one year is less or more profitable than another, are questions often rigorously analyzed by highly-paid consultants, who may still reach mistaken conclusions. There may be multiple causes for a loss. ... The difficulties of a claimant's providing evidentiary support and the claims administrator's investigating the existence and degree of nexus between the loss and the disaster in the Gulf could be overwhelming. The inherent limitations in mass claims processing may have suggested substituting certification for evidence, just as proof of loss substituted for proof of causation. ...
In re Deepwater Horizon, --- F.3d ----, 2014 WL 841313, *5 (5th Cir. 2014).
Readers may also be interested in a Bloomberg News article by Laura Calkins and Jeff Feeley entitled BP Must Live with $9.2 Billion Oil Spill Deal, Court Says. In other BP news, looks like it can drill in the Gulf of Mexico again, according to the NYTimes.
Tuesday, March 4, 2014
Louisiana Law Review is hosting a symposium on Multidistrict Litigation this Friday, March 7, 2014, that focuses on remand and may be of interest to our readers. The title of the symposium is "The Rest of the Story: Resolving Cases Remanded by MDL Here's the link for registration and additional information.
Here's the list of Panels and Panelists:
8:25-8:30: Welcome Address & Opening Remarks
- Chancellor Jack Weiss; LSU Law School
8:30-9:30: Panel 1: Collaboration of Judges and Attorneys in MDL Case Management
The panel will discuss how attorneys and judges can successfully collaborate to use disaggregation as a tool of effective case management.
Moderator: Francis McGovern; Professor of Law, Duke Law School
- Judge Eldon Fallon; U.S. District Court for the Eastern District of Louisiana
- Richard Arsenault; Neblett, Beard, & Arsenault
- James Irwin; Irwin Fritchie Urquhart & Moore, LLC
9:40-10:40: Panel 2: Effectively Planning for Disaggregated Discovery
The panel will discuss when discovery issues should be disaggregated for separate resolution, and the costs, benefits, and challenges of reserving issues for separate discovery.
Moderator: Judge Lee Rosenthal; U.S. District Court for the Southern District of Texas
- Mark Lanier; The Lanier Law Firm
- James Irwin; Irwin Fritchie Urquhart & Moore, LLC
- Dean Edward F. Sherman; Tulane University Law School
10:50-11:50: Panel 3: Integrating Aggregated and Disaggregated Discovery Issues
The panel will discuss various kinds of discovery (e.g., E-Discovery, expert discovery, and specific discovery), and the strategic and case management challenges each method presents in the context of MDLs, including both aggregated and disaggregated discovery issues.
Moderator: Mark Lanier, The Lanier Law Firm
- Judge Lee Rosenthal; U.S. District Court for the Southern District of Texas
- Francis McGovern; Professor of Law, Duke Law School
- Richard Arsenault; Neblett, Beard, & Arsenault
- David Jones; Beck Redden, LLP
11:50-12:10: Lunch Break
12:10-1:10: Panel 4: (Lunch Presentation) The Real Story: FJC Data on What the Empirical Data on MDL Remands Shows
Federal Judicial Center researchers will present findings from their research on multidistrict litigation. The analysis will focus on two sets of cases: (1) cases that are considered for transfer but not transferred, and (2) cases that are transferred and that are subsequently remanded back to the transferor court. Understanding these cases, and the cases that are resolved in the transferee court, may provide some insight into the effects of aggregation on various kinds of cases
Moderator: Judge Lee Rosenthal; U.S. District Court for the Southern District of Texas
- Emery G. Lee, III, Federal Judicial Center
- Margaret Williams, Federal Judicial Center
- Catherine Borden, Federal Judicial Center
1:20-2:20: Panel 5: When Remand is Appropriate
The panel will discuss at what stages plaintiffs, defendants, and judges perceive optimal windows to disaggregate various kinds of issues, and the factors that influence the decision and timing.
Moderator: Dean Edward F. Sherman, Tulane University Law School
- Judge Fallon; U.S. District Court for the Eastern District of Louisiana
- Professor Elizabeth Burch, University of Georgia School of Law
- David Jones, Beck Redden, LLP
2:30-3:30: Panel 6: How Remand Should be Effectuated
The panel will discuss how judges and attorneys work together to effectuate remand of MDL cases, including methods for ensuring smooth transitioning of work product, case management, and expertise to state and federal judges upon remand.
Moderator: Francis McGovern; Professor of Law, Duke Law School
- Judge Fallon; U.S. District Court for the Eastern District of Louisiana
- Professor Teddy Rave, University of Houston
- Professor Elizabeth Burch, University of Georgia School of Law
3:30-3:45: Closing Remarks
Tuesday, January 14, 2014
The Fifth Circuit issued a decision on January 10th affirming the class action settlement in the In re Deepwater Horizon litigation. You can find the opinion here.
This opinion is the result of objections to the settlement, but BP intervened to argue that there was an Article III standing problem with the way the settlement agreement had been interpreted. That interpretation was very generous to claimants in its interpretation of how they must prove economic loss to collect. The problem BP faces now is that it didn't cap the settlement amount in the agreement (yes, you read that right, and furthermore this was a selling point of the settlement). As a result, BP has a classic "if you build it, they will come" problem and is trying to upend the settlement as a result. At the moment, the Fifth Circuit in a separate opinion by a separate panel has stayed the settlement adminsitration as it considers the interpretation of the agreement. In that separate opinion, the panel (which couln't quite agree) indicated that the agreement interpretation may be too generous and remanded for reconsideration. You can find that opinion here.
In the opinion issued on Friday, this panel indicated the interpretation may be just fine, and sent a strong hint to the District Judge about what he should do.
So here's the question, why did BP agree to these terms? It was an open ended settlement with a broad geographic reach and a flexible standard for compensation - that was clear from the start. I'm sure BP's excellent counsel knew this was a risk. So what happened? Were the economists predictions dead wrong? Is this just a case of buyer's remorse?
The WSJ has some coverage, here.